Bergen Brunswig Corporation

Bergen Brunswig Corporation

4000 Metropolitan Drive
Orange, California 92668
U.S.A.
(714) 385-4000
Fax: (714) 978-7415

Public Company
Incorporated: 1969
Employees: 3,8000
Sales: $4.84 billion
Stock Exchange: American

Bergen Brunswig Corporation—consisting of two subsidiaries, Bergen Brunswig Drug Company, a wholesale drug distribution firm, and Commtron, which warehouses and distributes home videos and electronic products—is one of the fastest growing corporations in the United States. Over the past decade, the corporation’s sales have increased sevenfold. Bergen Brunswig is the second largest pharmaceutical wholesaler nationwide, and since its incorporation in 1969, it has been on the leading edge of technological advances in accounting and marketing. It is the largest distributor of Pharmaceuticals and health aids to hospitals in the United States. Commtron, with headquarters in des Moines, Iowa, is the country’s largest home video warehouser and distributor. In the three years between 1987 and 1990, Bergen Brunswig Corporation has seen its earnings grow an extraordinary 300%.

The founder of Bergen Brunswig was born in 1854, in France: Lucien Napoleon Brunswig, the son of a country doctor. The youthful Lucien felt little inclination to pursue the healing art of his father; instead, his ambition lay in some day providing the drugs that were vital to patients’ treatment. Political turmoil in France, starting with the proclamation of the Paris Commune by radicals in 1870 and the Prussian invasion of 1871, which marked the onset of the Franco-Prussian War, propelled Lucien, as it did many other young Frenchmen, to emigrate to the United States.

Arriving unemployed and nearly penniless in 1871, 17-year-old Lucien was accepted as an apprentice to a U.S. druggist. Apprenticeship meant more than learning the drug trade; it also entailed sweeping floors, cleaning out the cages of the druggist’s pets, and other menial tasks. Despite his meager income, Lucien Brunswig’s hard work and self-denial led to his saving enough to open a retail drug store in Atchison, Kansas, when he was 21 years old. His drugstore was such a success that he sold it profitably and took the train as far southwest as it would go, to a few miles outside of Fort Worth, Texas—a dusty, crude town of a few hundred people.

His Fort Worth drugstore, serving both retail and wholesale, flourished. By 1883, less than five years after he had opened the store, his business did $350,000 in annual sales. In 1882, George R. Finlay, the owner of a well-established wholesale drug firm in New Orleans, invited Brunswig to join him as a partner. Lucien Brunswig, who had spent most of his life in France, readily agreed to sell his own drug business, head down to the United States’s “little France,” and became Finlay’s business partner. Finlay’s firm, Wheelock-Finlay, became Finlay and Brunswig. Upon Finlay’s death in 1885, Lucien Brunswig took over the entire wholesale drug operation, remaining, however, in New Orleans until 1903. His devotion to New Orleans is shown by the fact that he served as a police commissioner of the city for four years. In 1887 Brunswig took on a partner, F.W. Braun.

Although Brunswig was thoroughly acclimated and at home in New Orleans, he turned his ambition to faraway Los Angeles, California, a growing town of 30,000. Its future, he guessed, promised more than the South’s, and in 1888, Brunswig dispatched Braun to Los Angeles to open one of the few wholesale drug companies in the area, the F.W. Braun Company. Brunswig remained in New Orleans.

Business opened in Los Angeles in a two-story adobe house, conducted in one or two rooms on the first floor. Pharmaceuticals were not only sold over the counter, but a few salesmen also ventured out to visit druggists and procure their orders, which could be filled within two or three weeks. After a year, F.W. Braun Company was flourishing and moved into the Old Post Office Building next door, the first of a series of major expansions.

In 1890, Lucien Brunswig was still unwilling to uproot himself from New Orleans. He ordered, nevertheless, the opening of what would become a prosperous branch of F.W. Braun in San Diego, California, a city even smaller, dustier, and with fewer drugstores than Los Angeles. The coming of the Spanish-American War was a boost for the drug business nationwide, and Lucien Brunswig’s profits continued to soar. In 1903, deciding that the future of his company lay in the West, Brunswig finally sold his profitable New Orleans establishment and moved with his family to Los Angeles, to preside over the continued expansion of his business. In 1907, he bought out Braun, and henceforth, his business was named Brunswig Drug Company. It would be headquartered in Los Angeles. Lucien Brunswig steadily expanded his wholesale drug enterprise, opening branches in Phoenix and Tucson, Arizona, and a short-lived one in Guaymas, Mexico. As a result of World War I, Pacific Coast business boomed, far beyond Brunswig’s wildest dreams. In 1922 when other U.S. businesses were experiencing a slump, Brunswig’s sale of drugs as well as cosmetics, a recent and lucrative addition to the drug line, reached a record high level. In that same year, Brunswig decided that a manufacturing plant was in order that would eventually house a laboratory and would produce cosmetics. Goods that were manufactured in the Brunswig labs eventually made their way to the Philippines, Japan, and the Hawaiian Islands. Wealth had made of Brunswig an ardent bibliophile and art collector. In 1927 he presented to the University of California at Los Angeles more than 1,000 books for its library of French language and literature. With the onset of the Depression, Brunswig’s company opened soup kitchens to feed the desperately poor, since his own business did not suffer significantly. Brunswig died in 1943, two years after his retirement; he did not live to see his kingdom expand tremendously, as it did in the years following World War II.

Roy V. Schwab succeeded Lucien Brunswig as president of the Brunswig Drug Corporation, moving the company’s headquarters in 1947 to Vernon, California. By then, the Brunswig Drug Corporation had divested itself of its manufacturing plant and laboratories, concentrating solely on the wholesale distribution of Pharmaceuticals. Brunswig was considered to be the most advanced wholesale drug operation in the United States, although by no means the largest. It was the first wholesale drug company in the United States to introduce computerized punch-cards for keeping track of inventories. In 1949, the 61-year-old Brunswig Drug Corporation merged with the Coffin Redington Company of San Francisco, the first of numerous significant mergers. The company expanded rapidly in California. In 1950 it opened its San Jose division; in 1951, its Sacramento division; and in 1954, its San Bernardino division. In 1952, it acquired the Smith-Faus Drug Company, and by 1960, had 14 divisions in the southwestern United States.

In the eastern United States, another drug company benefited from the postwar economic boom. In 1947 Emil P. Martini founded and became the first president of the Bergen Drug Company based in Hackensack, New Jersey. A graduate of the New Jersey College of Pharmacy in 1923, Martini opened his first retail pharmacy in Hackensack five years later. A second one was acquired at the height of the Depression, and a third was acquired in 1937. A well-established member of the community and president of the New Jersey State Board of Pharmacy, Martini, along with a group of business associates, established a wholesale drug distribution company in 1947 named after the county of Bergen in which they lived. The success of the Bergen Drug Company was phenomenal, in part because of the insatiable demand for the wonder drugs of World War II, including such antibiotics as penicillin. Despite its growth, the company continued to offer same-day service.

With the 1955 death of Emil P. Martini Sr., his son, Emil P. Martini Jr., took over the helm in 1956. From then on, the Bergen Drug Company rapidly expanded and acquired other wholesale drug companies. In 1956, Bergen acquired Drug Service Inc. of Bridgeport, Connecticut. Between 1957 and 1958, Bergen operations were started in three California cities, Fresno, San Francisco, and Covina. In 1959, it became the first company in the nation to use computers for inventory control and accounting purposes. It continued to be on the leading edge of that technology thereafter. By the 1960s, Bergen Drug Company was among the largest wholesale drug distributors in the United States, supplying 5,000 pharmacists and hospitals. In May 1969 Martini successfully negotiated the purchase of Brunswig Drug Corporation. The latter had sought to buy the former until Brunswig Drug managers realized that financially it made more sense to have Bergen buy their company, as the price-earnings figures of Bergen’s stocks were more advantageous. The name of the new company would be the Bergen Brunswig Corporation.

Innumerable acquisitions followed. In 1970 alone, the Bergen Brunswig Corporation added 12 drug companies and laboratories, and transformed itself into a truly national drug distribution business. Head of the Bergen Drug Company since 1956, Martini, who had graduated with a degree in pharmacy from Purdue University, was given his original job in his father’s firm with the understanding that he was to learn the drug distribution business from the bottom up, which he did. Under his direction and that of his younger brother, Robert E. Martini, also a pharmacist and vice president of the company, the Bergen Brunswig Corporation became in the 1970s one of the most modern drug distribution companies in the United States. Bergen Brunswig revolutionized the trade in 1971 when it pioneered the electronic transmission of purchase orders to Eli Lilly & Co. In the early 1970s, Bergen Brunswig introduced the hand-held computer scanner, with which pharmacists could scan the bar-codes on merchandise. Stock was then reordered on the basis of the information collected by the scanner. The inauguration in the late 1970s of an advanced computer system automated the prescription department still further, connecting hospitals and chain pharmacies electronically to Bergen Brunswig’s distribution centers. Soon the majority of orders could be transmitted to Bergen Brunswig via telephone lines, and in the 1980s, satellite communication replaced conventional telephone lines. One hundred years after the opening of the F.W. Braun Company wholesale drug store in Los Angeles, the distribution time of drug orders was down from two to three weeks to less than 24 hours.

The 1980s saw the explosion of pharmaceutical and health care needs that in part explained Bergen Brunswig’s phenomenal growth. In 1981 the president of the National Wholesale Drug Association noted a 17% increase in the sales of pharmaceuticals in the first half of that year. The stock value of Bergen Brunswig Corporation increased between 1977 and 1981 by 50%, while its net earnings in the three-year period of 1987 to 1990 increased 316%, with an average annual growth rate of 25%. The aging of the U.S. population had something to do with this success, as did the popularity of its two biggest selling drugs, Zantac, for the treatment of ulcers, and Epogen, used in kidney dialysis treatment.

Despite the considerable increase in the number of its customers—10,000 by 1990—Bergen Brunswig could still guarantee next day service by means of its computer system. Bergen Brunswig supplies software to some 300 hospitals, thereby linking them to the company’s computer-driven distribution and pricing system. This equipment has helped Bergen Brunswig become over the years the largest supplier in the United States of pharmaceuticals to hospitals. In addition, the company has managed to attract customers through its Good Neighbor Pharmacy plan, which especially caters to the needs of independent pharmacies. The development in the 1980s of a new generation of automated distribution centers has speeded up service and delivery to the point where Bergen Brunswig has become the model for drug distribution companies nationwide, although it is second-largest in the drug distribution industry. The corporation’s new distribution facility in Corona, California, can process an order every three seconds—with 100% accuracy—of any of the 2,500 most popular pharmaceuticals or health care products. The goal of Bergen Brunswig is to get closer to the customer—the pharmacist or store manager— and anticipate needs to the point where the customer would never have to place an order. In this system Bergen Brunswig would monitor the customer’s stocks and automatically replenish supplies. The automated distribution system enables Bergen Brunswig and all other wholesale drug companies to process three times as many orders as previously.

The 1980s also saw the development of another line of products, the result of Bergen Brunswig’s acquisition in 1982 of Commtron, Inc., a national distributor of home videos as well as 4,000 consumer electronic products. By 1990 Commtron, a 79%-owned subsidiary of the Bergen Brunswig Corporation, became the nation’s number-one distributor of videos, with distribution centers and headquarters in des Moines, Iowa; Salt Lake City, Utah; and Chicago. With 1,000 employees, Commtron’s sales in 1990 increased 17% over the previous year. Also in 1990 Robert Martini became president and CEO, and Emil Martini Jr. took the post of chairman of the board.

The Bergen Brunswig Drug Company, the 100%-owned subsidiary of the Bergen Brunswig Corporation (BBC), which generates more than 87% of the business of BBC, was converting to paperless billing, and constantly refining its funds transfer and information management systems in the 1990s. Pharmacists occupy many of the company’s top management positions, a trend that will continue well into the next century. CQI, a “continuous quality improvement” program, inaugurated in 1990, should also produce results in terms of increased customer satisfaction. With CQI, volunteer employees attend team leadership workshops, consisting of 80 teams of 5 to 8 members, to analyze problem areas. An example of the results of CQI is the case of truck drivers who find better routes to hospital pharmacies, and who devise quicker means of processing returnables. The future of Bergen Brunswig Corporation undoubtedly anticipates greater growth and a stronger emphasis on Pharmaceuticals rather than on videos and electronic goods, plus a continuing application of technology and streamlined customer service.

Principal Subsidiaries

Bergen Brunswig Drug Company; Commtron, Inc. (79%).

Further Reading

Fay, John T., NWDA 1876-1986: Centennial Plus Ten, Alexandria, Virginia, National Wholesale Druggists’ Association, 1987; Wiley, Karen, ed., Centennial Sampler: 1888-1988, Orange, California, Bergen Brunswig Corporation, [1988].

—Sina Dubovoj